♪ good morning and welcome to "street signs" i'm joumanna bercetche in london. these your headlines >> well, here at the g7, the u.s. president, mr. trump, says he's happy that china is back in touch on trade, but the chinese foreign ministry hitting back saying it hopes washington will return to the path of rationality. european markets pair losses and u.s. futures turn around amid hopes the two sides will return to the negotiating table

and break the impasse. u.s. treasury yields come off session lows on the new optimism after a bond rush pushes the ten-year to levels not seen since the middle of 2016 and hong kong protests take a violence turn again as police draw guns and use a water cannon in the 12th week of pro-democracy demonstrations to rock the chinese territory ♪ all right, good morning, everybody. it is a bank holiday in the uk but not so much for european markets. i'll take you to all the price action we're having and seeing today in some of those european indexes. let's start off with germany we're getting some data out. so let me just bring you those numbers there. we are seeing yet another decline in business german moral

in the month of august it has come in at 94.3, this is below the consensus forecast of 95.1, so drop in the business clie mate index, kurn season index coming in at 97.3. again, this is the lower than the consensus forecast of 98.6 forehand-looking basis, expectations at 91.3 versus 91.5 here just putting them all together, not only are current conditions missing, but also on a forehand-looking basis 91.3 also coming in lower than expectations we also had some revisions for the july numbers as well, revised to 95.8 for the business climate index. and that was 95.7. so really a marginal revision upwards for the month of july. but i should tell you back in july, the drop was the largest decline seen since february,

2009 these numbers not giving a lot of comfort to investors that the german recovery is indeed on track. what we're seeing is a dip in the euro down about .2 as markets digest this data let's get a little manufacture color out of the president who joins us down the kline. thank you for taking the time to chat to us this morning. your take on these numbers because it doesn't appear to me as though the situation is improving on the ground in germany. >> good morning, no, it's not improving. quite the opposite this is very bad newsindeed. very bad because it's not just manufacturing where the decline continues, but we now see that weakness is really affecting the service sector, which is large and important for the german economy and nechb construction where the economy was booming, we see that there is at least a

slight decline in our numbers. so the overall picture is really bad. >> it's interesting you mentioned construction because back in july it was one of the positive spots, but this is interesting looking at this ifo, the pmi numbers did show a little bit of improvement both on services and on manufacturing, even though manufacturing is still in contractionary territory are you suggesting that some of the numbers are not translating to business sentiment? >> it doesn't seem to be translating. the ifo business sentiment is based on almost 10,000 responses we get from german businesses, so it's really very broad. and it seems that this -- the overall assessment, maybe this is very bad among companies. this may have to do with psychology also, but the pmi seems to be a bit optimistic in

that light. >> german gdp in the second quarter we had negative prints the sentiment is very negative the pmi numbers are still in contractionary territory is germany headed towards a resner recessi recession? >> well, it increasingly looks like that. that will be difficult to avoid. we're not there yet, but it will be difficult to avoid. it doesn't mean we get a prolonged downturn, but the current situation for these two quarters two and tleerhree, it s very bad. >> what should the german government do to counteract that i want to refer to some comments out of the bank.

do you ascribe to that same view as well? >> well, he said that's right. a technical recession is not a prolonged downturn nevertheless, i think the german government should think of doing something. the government plans an income tax cut for 2021 i think we should bring this forward to 2020. the government should also do something about corporate income taxation one possible instrument would be depreciati depreciation the cost to the government would be zero. it would help company and set incentives to invest now i think the government shouldn't panic indeed but should do something. >> most analysts i speak to tell me that the german economy is one large shock away from a

sustained downturn here and that could be in the form of either a no-deal brexit or further escalations on tariffs tariffs being applied on european auto makers how are businesses thinking about that on the ground in germany in the context of further potential head winds to come by the end of the year? >> i think most businesses are preparing for this and are really worried that we see this in our numbers this has to be taken serious of course the german government can do little about foreign demand it's coming from the outside some people say the german government should invest more. what people think is public investment means build bridges and roads and the construction industry is running at full capacity if you decide to invest more now, something will happen maybe in one or two years. so that's why i think at the moment tax cuts are an effective option and then also the german government should think hard

about long-term confidence of german companies this is then more indeed about topic investment but also about energy prices and the security andreliability of energy provision and energy policies, so it should turn its attention more than it has in the past towards industry, what the government has focussed on in past five or six years is mostly redistribution policies, social policies it's time to think very seriously about how the manufacturing sector, which is so important for the german economy can be settlized >> thank you very much for speaking with us, president of the ifo institute there after we just got the data. let me take you to the dax heat map you're trading down .3 percentage point it isn't just all about the weaker ifo numbers that has come out. of course the focus has been on the developments on the trade war front, both the u.s. and

china and now announcing further tariffs on one another's economies respectively that has really hit sentiment over the weekend and the futures obviously on friday taking a bit of a nose dive we have had further information in the last 60 minutes or so but this is the picture for broader european markets this morning. the uk ftse is closed. it's a bank holiday. we have fitsy mib up .2 percentage points. it's a big week for italian politics as well so watch out for that later in the week but of course today the theme has been that of trade war speaking of which, president trump said beijing told u.s. trade officials in a call last night that it wants to return to the negotiating table. trump called the move a quote, very positive development for the world. meanwhile the chinese foreign

ministry says beijing is, quote, resolutely opposed to fresh u.s. tariffs, warning china will take more steps to protect itself interests in washington enacts the new duties it added that it hopes the u.s. can, quote, return the path of rationality. steve joins us with more it's been a very, very eventful g7 over the last couple days, steve. it looks as though in the last hour or so there have been some conciliatory comments between china and the u.s. >> it's been a very conciliatory meeting all around, mistakes that were perhaps made by the canadian presidency last year where famously in quebec there was a communique waiting for president trump to sign and he walked out without signing the communique it was a ranker all around between justin trudeau and president trump. mr. macron, bit of enforcer with merkel seeing her influence waning as the lead country,

leader of europe it's interesting that macron has been very careful not to upset the u.s. over a whole host of issues that's probably why we won't get a communique this time around. we found out in advance there would be no communique because there was so many differences of opinion over protectionism, over trade, over tariffs, over the environment, over climate and perhaps how to deal with brazil as well. there will be no formal group g7 communique in previous years it's looked like g6 plus one, there will be no repeat of that, but it also means of course there is no forthright action no, coordinated policy action. i'm sure all of you know by now, the g7 was formulated back in the 1970s to form an economic response, coordinated economic response to what happened with the world's first oil shock in the early 1970s. and of course the economic mantra has been at the basis of what the g7 stands for ever since. but this time around, perhaps there's been a little bit of

grumbling behind the scenes by some members of the u.s. administration how president macron has made it about gender equality, climate issues none of which the french and the americans see eye to eye on. as you say the last 24 hours, perhaps a little more conciliatory talk coming out between the americans and of course the chinese chinese not being in the g7. very important to make that point as well and the president making his point why he has had his stance on china. let's listen in. >> if i hadn't won, our economy would have been overtaken by china and all these clowns sitting on television that have been running this government for many years that have been taken to the cleaners by china, they're also going to say, well, i don't think the president is negotiating properly they don't know what they're talking about. i have great respect for the fact that china called and want to make a deal i have great respect and i have great respect for president xi and i think we're going to have a deal because now we're dealing

on proper terms. they understand and we understand >> and of course there's been lots of interesting sound bites from the president as well including the do you have any regrets about how things have done any second thoughts about how you enacted trade policy and the trade dispute with china yeah, i had a few second thoughts everyone thought he was going soft of course then we had stephanie grisham the white house secretary saying, no, the president's regrets was he wasn't tough enough on china earlier. one area where perhaps president macron hoped to make progress was nothing really to do with the g7 that was over iran, of course, because famously may 2018 the u.s. came out of the jcpoa, the joint kbcomprehensive agreement with iran disagreeing how to go sfward with iran

it was a pact formed in 2015 under the obama presidency as well the u.s. had pulled out of that and there foreign minister of iran came here as well to the sidelines of the g7 which the americans were blind sided no, i knew exactly what the french were doing. they have my approval. but they can go their own path on iran and i will go my path as well he also made more comments about iran this morning. let's listen in. >> they have to stop terrorism that is your number one nation of terror. not in the last year and a half, two years because they can't spend like they used to spend. they took president obama's $150 billion and dolled it out to terrorists all over the place. i think they're going to change. i really do. they believe they have a chance to be a very special nation. i hope that's true. >> but it does seem quite incredibly so much time has been spend talking about iran where there are so many enormous

economic issues. we heard from ifo as well beginning to effect the european economy and indeed the global economy as well many will there be a coordinated response? undoubtedly not at the moment because the americans very robust strategy towards china as well, not necessarily backed up by any of the europeans including the new best friends boris johnson and president trump of course boris johnson has an international strategy as well as wanting this great deal the president talked about between the british and indeed the u.s. as well the british need all the deals they can get and china is where they're looking to back to you. >> we talked about all of these different issue, trade war, iran, surprise guests, climate change, gender equality all very important topics for g7, one top nick particular is looming large and that is brexit this was boris johnson's first big summit, steve. did he make any head way when it

comes to potential renegotiation of this deal are there any positive steps to take away and that we can look forward to in these coming weeks given how crucial the timing is now? >> that's very interesting question has mr. johnson made any progress on that the fact we haven't gone backwards is positive. france 24 saying the u.s. president has the ability to make or break these meetings international summits on the basis of his mood and indeed his twittercontent as well others were saying, look, the fact that there hasn't been a big disagreement here at g7, so that could be taken as mildly positive the fact that we haven't seen more ranker between donald tusk and johnson, that follows the fact they have both been accusing each other of being mr. bad deal, mr. hard brexit, mr.

no-deal brexit who will be responsible for it as well many the fact that we haven't gone backwards and mr. johnson had cordial meetings with the french and germans as well, perhaps should be taken as a positive step again the germans making the point, what alternative arrangements have you got? show us these. show us your alternative so we don't get a falling out of the european union on october 31st very interesting comments on our sister station sky last night with boris johnson went nfor a swim you can see some rocks out there's another rock a bit further that boris johnson apparently went for a lovely swim yesterday and he made the metaphor from the coast you can't see a way through this rock, but actually there is a way through it and he was drawing the metaphor with brexit it may look like you can't get away through this brexit quagmire but there is a way

through a rock as well back to you. >> thanks for the latest there, steve, of course that is the spirit thank you. that was steve live covering all the events at the g7 summit this weekend. g7 leaders are close to a plan tackling fiefrs in the amazon. they were finalizing a deal to provide, quote, technical and financial help to countries hit by the fires brazilian war planes have been dumping water on some of the affected areas after the president bolsonaro is fighting the blazes. as we head to the break, here is a look at how u.s. markets are called to open lot of developments, but as we just spoke about with steve in the last 60 minutes or so, there have been some encouraging comments from the president about potential reconciliatory talk betweenhi cna and the u.s this is the picture, slight in the green. we'll be right back.

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♪ welcome back to "street signs. our top story today, president trump says china called u.s. trade negotiators last night and

want to come back to the negotiating table. now, this is after a sharp escalation in the dispute on friday a mid a tit for tat tariff announcements china said it would slap duties on 5 to 10% on 75 billion worth of u.s. goods. beijing said it would reinstate 75% tariff on u.s. autos and increase measures on $300 billion of goods from 10 to 15%. so 5% higher tariffs across the board. trump ordered u.s. manufacturers to leave china as well let me take you to the price action in europe today this is the picture for german autos. we are trading a little bit positive again this in line with the news that has emerged in the last half an hour or so whereby trump said the two sides have indeed

engaged in a dialogue. that's giving a little bit of boost to the trade sectors autos being front and center some of the german autos rebounding let me take you to luxury stocks as well. this is a sector we're very interested in. all of these sectors have turned around in the last 45 minutes or so, but the picture at the beginning of the day was quite negative now at least some respite is in sight. let me bring in the chief investment officer of italy from ubc global wealth management matteo, so much is going on in these global markets we will, of course, talk about italy. but first i want to ask you about your take on this tariff tit for tat that we've had since friday and over the weekend. we went in on friday thinking that jackson hole would be the primary driver of markets, but

by the close, we realized that this trade war had gone yet to another level of escalations what is your take away as an investor with all of this uncertainty in the market. >> yes, well good morning. we cannot ignore the escalation that we have seen in the last 48 hours. even though there may be some relief in the next few hours, we still think this is a rivalry which will last for a while. so, we responded to the news we got a position. we move lightly under weight, equities we moved under weight emerging markets because we think this is a negative position that has been taken conversely, we also should be aware that the central banks will keep responding to the news, will keep fight in economic weakness and caution the economy and before we go too much under weight, we don't want to be excessively bearish, but we want to take some risk off

the table. >> it sounds as though you have hope in what the central banks can achieve. coming into the show i looked at what is priced in. the market is expecting the fed to go more than 30 bases points at its september meeting, six basis points worth of cuts priced in for the ecb. if the ecb were indeed to go ahead and cut, do you think that would be a positive signal to the market here or does the market need more than that >> well, the market needs to know that the central banks are there and ready to act and protect the economies. not really so much about the size of the cut which we're going to see in the next meeting, but it's really about what they're going to tell us and what their stance will be over the next year or so. >> indeed we had very week ifo numbers coming out of germany this morning, not reassuring there. what does it mean for the rest of europe if germany, which is the power house of the european

economy is on track, potentially to enter into a technical recession? >> well, clearly it's not good news we know that germany is a fantastic exporter but also imports a lots of components from many countries in europe including italy. a large chunk of italian exports for example. germany is down, clearly that's a pretty strong message going to the ecb and also to the european commission i wouldn't be too surprised by this we're seeing because with all the political uncertainty that is flying around a lot of companies are, you know, slowing down on investment they want to see better political stability before they move on. clearly that is an important part of gdp. that implies that you can see weakness in the gdp because there is political uncertainty that is a direct link. >> matteo, speaking about

political uncertainty, i'm going to take you to your country, to italy. lots of developments in the last week your prime minister has resigned he's now in an acting capacity what do you think of the potential alliance between five star and pd. would that be a positive catalyst for italian assets here or do you think that the market has baked in a lot of that optimism at this point >> well, i think if we look at the italian ten year government bond it has a yield of 1. 3% so there is a lot of political risk which is priced in the italian market at this point this gap has widened over the last year because the market clearly was tactical about the government which resigned last week now, if we get an alliance between the five star and democratic party, if that alliance is focussed on fiscal

discipline and rebuilding the relationship with the european union perhaps on environmental sustainability, that is probably going to be well received by the market otherwise, it will be elections. we may discuss the post election scenario we think in the near term elections will bring more volatility you forget one end the safeguard closes kicking in. so automatic increase by 3 percentage point which is will affect the economy on the other hand, you have the political campaign which may be uncertain with some political parties which may have populistic tones. >> thank you very much for taking the time to chat to us, matteo the chief investment officer at italy ubs global wealth management before we head out to the break, some positive beach scenes melania trump and bridgeette macron are on foot to the beach.

the two first ladies head towards the beach in their motorcades, but doesn't appear we can see those motorcade but we can see the beach so at least some people are taking advantage of this sunny weather in france this weekend we'll be right back. ♪

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♪ good morning and welcome to "street signs" i'm joumanna bercetche and these are your headlines. president trump says he is happy that china is back in touch on trade but the chinese foreign ministry says they hope washington will return to a path of rationality european markets pair losses and u.s. futures turn around on the new optimism while u.s. treasury yields come off session lows after a bond rush pushes the ten-year to levels not seen since the middle of 2016 germany's ifo institute says industry is in recession and services are following as its business sentiment survey polls more than expected in august and hong kong protests take a violence turn again as police draw guns and use a water cannon in the 12th week of pro

democracy common dmon stragssem to rock the chinese territory. ♪ well, it's a bank holiday in the uk but not so much the case for continental europe european markets are actively trading and this is a picture this morning we have now all of the three indexes that are in trading up in the green led by the ftse mib, somewhat of a surprise, bucking the trend of last week when italy was under the spotlight. but you can see that for the large part, european indexes are pairing some of the losses we saw early on in the session after positive signals from president trump on the sidelines indicating the two sides, china and u.s. are looking to reestablish dialogue again that has calmed the market nerves somewhat but the german index is trading on water. we had weak numbers out of the ifo institute manufacturing, construction and services are still pointing to a decline.

so not encouraging data out of germany this morning let's look at foreign exchange, though friday we had the dollar trade on the back foot to the tune of half a percentage point. today we have euro trading a little weaker, so we've got the dollar strengthening to the tune of .3% versus the euro and cable we also have trading .3% weaker as well. crucially above 122 now. it wasn't so long ago we were trading at 121.40. all eyes on a sharp depreciation in that currency pair overnight, .8% is where on shore is trading this morning, 7.15 is the level. quick look at u.s. futures again it has been a roller coaster session. we were pointed to open up weaker but now it looks as though all of those three indexes are indeed going to open up in positive territory this

after a very strong loss of session on friday. for the month of august now the dow is down more than 4% let's see how things pan out later. we have been talking about the g7 summit, but also let's talk about the g7 leaders wives because here are some live images of the wives heading for a beach visit. this is hosted by bri jeet macron the wife of president macron they are on route to the beach hopefully to enjoy some of the sunshine that the south of france has to offer and perhaps potentially making that 450 meter swim out to the rock that prime minister boris johnson did yesterday in early hours of sunday morning so we'll keep an eye on that footage, but at least the ones having fun on the sidelines of the conference for the first time in 12 months, citi is positive on the european airline sector to year end with easy jet and air france amongst some of the names with the highest upside potential

let's bring in managing director and associate director of research at citi who joins us to discuss your recently published note on european airlines. you see reasons for optimism, anti-consensus call especially on a day like this when we have all of these trade war developments. >> good morning, joumanna. it feels like it's been a tough backdrop and it has for the european airlines in the last 12 months we have seen all sorts of things hit the tape, strikes, overcapacity, price declines and it's been a tough time for european airlines. we see rays of light going into the fourth quarter of the year as strikes abate, capacity particularly in short hole europe comes down and also on the demand side, the travel companies out there and the airlines in particular are beginning to say that uk is stabilizing. >> let's look at price and

volumes here looking at some of the data, the global average return fares has been on the decline for years and years and years now. the average fare is on the decline, and yet you see demand picking up does that fully offset the decline in prices? >> couple of things. you're totally right about the long-term picture. global average fares have fallen by about 1% since the 1980s. we have had this massive influx of low cost carriers into the european market. that ultimately has driven ultimately short haul and long haul price declines. however, there's a couple things to be aware of structurally you're seeing a cap x cycle. 2015 and 2025 it's tough to be bullish overall, 6% growth in supply during that period. now can demand keep up with supply over that period? probably not but what i'm talking about is a window here a sugar rush of about 12 months where you're going to see supply cuts at time of demand stability and that is going to result in price uplift. >> where are the supply guts

going to come from is it people simply dropping out of the market? is it consolidation because when we talk about european airlines the subject that comes up over and over again is too much competition, there's just too much competition so where do the supply cuts come from >> competition is still ruthless you compare the u.s. market, four carriers running 80% of the market share versus the european market which has 20 carriers running the same 80% of the market share it's a totally different outlook. but what i would say is that if you strip that back and say what are we seeing in the next 12 months it's less dr more price increases and ultimately less capacity coming through. you asked specifically about who is cutting the truth is that they're all cutting. we have seen cuts thomas cook and easy jet fundamentally also the boeing 737 max has also had an impact in terms of supply if i had to make an estimate, this winter expect supply growth

to be growing only about 0 to .2% demand stays firm, prices are going up. let's talk about brexit. i'm also curious to hear whether or not that 12-month window encompasses that tlatest i read sup that there is a contingency plan but only for a 12 month period that would allow flights to continue between uk and eu. >> yes, of course there are contingency plans. have they been made fully available? no is the secretary exposed multiple set of circumstances. currency, we have seen it with the pound the euro and the pound and the dollar a lot of these companies are effectively short the dollar in their pnl. so as we go through october, they'll be very much exposed in terms of the risks that you may see within those currency fluctuations and obviously you'll know as currency fluctuates, demand

ultimately gets stimulated and reseeds and that could be an impact short-term. >> no risk to operations here i'm talking about ryan air's ability to operate in the uk you don't see any risk to that >> near term, no there are contingency plans in place for airlines to fly as part of any brexit outcome. >> where does industrial action play into all of this? many summer travelers read the headlines and affected by these industrial actions both for british airways, ryan air to name some of them. how does that affect your view and outlook for some of the names? >> you're totally right. the contrarian would say clearly headline risk and clearly a risk of price softness as we begin to see it proliferate through the press. the reality is that most of these flights are flying at the moment and airlines have been very early notifying passengers as well. there have been some missteps over the weekend as i'm sure you saw reported overall, as we saw last year in

ryan air's case, almost all of the schedules are being flown. >> i want to ask you perhaps about a more long-term question. people are becoming more aware of the impact and some people feel guilty traveling in some scandinavian countries the airlines have pointed to the fact that passengers are traveling less due to environmental concerns how big of an issue or challenge does this pose for the airlines initially in the future and what are they doing to combat other people's concerns? >> very good question. this has been very thematic at all levels of the press. i would say the biggest issue that you've seen is particularly around the swedish market and the scandinavian border market where we have seen significant volume declines this year. now, does that leak into other markets? the way t could leak into other markets specifically could be around tax revenues. so what governments do is jump on the bandwagon we saw it recently with the french echo tax, jump on that and therefore impact demand going forward, but yes it's a

risk the phrase you're looking for is flight shaming effectively people getting into the office and being told why are you taking that marginal flight to miami to that conference in barcelona? your co2 emissions are too high. the irony is that actually airlines overall only make up 2% overall co2 emissions. it is a bit of a misnomer. >> thank you for joining me on your show with anti-consensus positive view. managing director and associate director of research at citi credit suisse revealed its new strategy including a ramp up of the swiss division. it will make investments in quote the high 3 million digit range through 2021 to boost its swiss units. the launch follows the close of

ceo three year reinstruction at the end of last year that is the price reaction credit suisse down 24% over the last 24 months. and reportedly the latest european corporate essiloruxottica. they have built a stake and still in the process of buying shares according to reuters. the world's largest lens and glasses manufacturer has been rocked by an executive power struggle since the two companies merged last year. and cnbc sources say deutsche bank and ubs have discussed ways to combine parts of their businesses but didn't find an agreement on critical questions. talks on a potential alliance which were first reported in "the wall street journal" investment banking operations. ubs has declined to comment. what more you tell us?

>> reporter: well, deutsche bank is also declining to comment on that story from the "wall street journal. my sources have confirmed that there were talks happening in june about potentially tying up the investment banking unit. it kind of also makes sense because ubs is very strong in equities, deutsche bank has been brought up the strongest banks in fixed trading, fixed income and currency and rates they have weaknesses there especially if you look at the last years, but still they're a big name in that business. and to combine both would make actually an investment bank giant. but still there have been disagreements over critical questions couldn't be solved so no tieup close to the horizon, close on the horizon for ubs and deutsche bank here but also the asset management business was very close to tying up but then in the end they couldn't come to a decision of

who is controlling the whole thing and deutsche bank wanted to have the control over a combined asset manager which didn't go down to the ubs as such so you see there are talks on going and as to what i'm hearing as well that even the executive for it of deutsche seems to think that ubs could be a very good fit, but still there are too many questions open and too many critical issues open to actually combine both lenders. also just on a different note, to combine banks between switzerland and germany might not be the easiest because clearly across border merger is more critical and also more expensive than just to have a domestic merger. we all know since the commencement of deutsche bank story fell through how difficult it is to have a domestic merger

for two big banks. for now a lot of chatter around deutsche bank but no merger on the horizon. back to you. >> thank you lots of people have been talking about the difficulties of a cross-border merger. that was anet ta in frankfurt. global leaders look to wrap up the g7 summit on a draft deal on digital taxes this time we'll be right back. ♪ i planned each charted course ♪ ♪ each careful step ♪ along the byway ♪ much more ♪ much more than this ♪ i did it my way (announcer) verizon is america's most awarded network and the only one with the galaxy note10 5g. right now, when you buy one, you get a galaxy note10 free. that's verizon.

♪ welcome back to "street signs. saudi tourists today spend as much as $26 billion abroad each year and crown prince mohammed bin salman is hoping to reinject all that cash back into the kingdom's economy. hadley joins us with more on this story hadley, tell us more >> reporter: hey, good morning, joumanna that's right 26 billion that saudis spend externally, the crown prince wants to bring all of that cash, reunjekt that into the saudi economy and bring in foreign tourists as early as september let's take a look at one of the places that he wants them to go.

it's a place left virtually untouched for thousands of years. 20 square kilometers of pristine dese desert chris crossed to one of the trade routes now earmarked by the country's crown prince to bring in tourists and investors to saudi arabia. >> i think it's working for us very well that it hasn't been touched. this is probably one of the few sides around the world today that has a side but largely undeveloped. >> reporter: 131 tombs dot the landscape, littered by thousands of ancient scribblings carved into sand stone mountains against a backdrop of empty desert. >> this is really a con influence of cultures, isn't it? >> yes, this is the southern capital, a place where people came from all over the world -- >> 2,000 years ago. >> exactly >> reporter: the royal commission is one of several megaprojects tapped by the

country's crown prince to bump up tourism revenues 10% of gdp by 2030 and add an additional 1 million jobs. >> we believe really it takes a village for the local economy to beat resilience. tourism is an amazing job creator. the business models for the tourists operators, developers and the museum of cultural heritage here demand capable -- >> highly skilled labor. >> absolutely. our agenda is about new oil revenue creation and that can only happen if people can create value and interact with these operation. >> other focus primarily on the saudi market, they are looking to leverage its cultural heritage with star-studded open concerts and lux living. >> this was a stop on trade caravans for thousands of years, but now it's an entertainment hub. >> the vision to be the place of heritage for the world is long-term. we are certainly keen to sustain

the same level of integrity between heritage and nature no matter what. we're very ambitious and that makes us look for the right partners who are able to dream that big and come up with new technologies to sustain our requirements >> just one piece of an ambitious plan to put saudis to work and open up the country to tourists for the very first time for cnbc, i'm hadley gamble. now as i say there, joumanna, this is just one piece of a very, very big project for the crown prince this is all part of the vision 2030, as you know and one of the big questions, of course, is how many billions of dollars it will take to get off the ground to get to that 10% contribution to gdp they want by 2030 to get the 1 million jobs already a lot of work is being done we earlier spoke with the ceo of the projects a totally different megaprojects they're working on that involves six flags, involves water parks and theme parks as well as entertainment more generally and that's a project they're already putting $8 billion behind with the

public investment fund obviously a very, very exciting project for saudi arabia, a country that's been closed for decades but at the same time a lot of questions when this will start to deliver joumanna >> if you're a woman, you can drive to those venues now. positive step as well. hadley bringing us the latest on the saudi arabian tourism drive. french and u.s. officials have struck a draft compromise deal on taxing digital companies according to a reuters source. let's get back out to steve who has been monitoring all the g7 developments we talked about everything now we can talk about digital tax. this is something that's been a thorn in the president's side the 3% digital tax that france had introduced looks like we may be on the verge of a breakthrough here, an agreement of sorts between the u.s. and france. >> i wonder, joumanna. i do i thought about this a little bit about the g7 finance ministers and central bank meeting where i spoke very specifically about this very

issue with the french finance minister who is driving this sales tax through. why have you gone on your own with this? there is in the background a deal which may or may not happen at some stage. and the point is that the deal which would be a global deal amongst oecd countries which includes of course the u.s. is moving at a snail's pace the french decided to push things forward i understand perhaps brew that's frustration about getting an agreement on a global basis. 3% tax on global revenues of over 750 million euros over 25 million euros in france as well on all these huge digital companies. now, the u.s. have promised a 301 investigation into this digital sales tax, worrying it's targeting unfairly u.s. companies including the likes of facebook as we heard from the president in previous times, possibly a retaliation would be a tax on french wine of all things as well but the actual wording of this

reuters copy as well has given a degree of opacity, ie, the french apparently would repay the difference between what is agreed on an oecd level and indeed what the french are proposing 3% we don't have a deal to use as a benchmark, how can the french repay anything as well again, it's an example of the great french word. >> indeed. steve, even though there was no communique at this g7 summit, is it fair to say putting everything together that this g7 summit was a lot more conciliatory in nature than the one we had last year >> joumanna, your benchmark is down there you are absolutely right justin trudeau had the communique ready in quebec last year as well but because of a spat over various issues between justin trudeau and the u.s. president, the latter got back on his plane and went back to washington. you're absolutely right.

a lot less rank so far we have a press conference later on between macron and indeed the u.s. president as well let's see how this goes. in terms of concrete action, let's wait and see and not be too pessimistic. back to you. all of the three indexes are pointed to open in the green dow 280 points up on the futures. so things have really turned around in the last couple hours or so. but that is it for our show today. we'll be back tomorrow i'm joumanna bercetche "worldwide exchange" is coming up next. ♪ moving is hard.

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♪ our stocks set for a major comeback on a monday the markets coming off another big drop on friday but green is the color of the day because what a difference a phone call makes. new comments for the president this morning signaling a possible call in the trade cold war. we'll tell you what he has said that is moving markets. demonstrations in hong kong turning violent over the weekend police using live ammunition and water cannons all to push back protesters we'll bring you the very latest on that developing story it's 5:00 a.m. on monday, august